Methods utilizing computers to sell insurance, for example, selling insurance via the internet, are in widespread use. Such methods permit users to, for example, perform basic steps in the complicated process of purchasing insurance, such as submitting a request for a quote via a web site, or entering information about the insured's home in order for an agent of the insurer to later contact the insured to recommend changes in insurance coverage.
A known method of modifying an insurance pricing model is as follows. First, the insurance provider collects information from individual customers. As each customer provides information, his or her quote is provided based on the existing insurance pricing model. As an ongoing process, the information provided by customers is collected and analyzed. Actuaries use this information and market comparisons to create new insurance pricing models. The new pricing models are compared to other insurance pricing models available in the marketplace. If a new pricing model is deemed worthy of use, this new model is filed with state authorities. Some states, known as “prior approval” states, require state approval prior to the use of an insurance pricing model. In these states, after the approval of the state authorities, the new insurance pricing model is used to provide insurance price quotes to customers. Other states, known as “file and use” states, allow the use of a pricing model after filing with the state, but prior to approval. In these states, after the filing with the state authorities, the new insurance pricing model is used to provide insurance price quotes to customers.
The practice of balance transfer is well known in the credit card industry. For example, a customer chooses to transfer outstanding balances from one credit card to another in order to take advantage of lower interest rates, lower minimum payment, lower penalty fees, or the like. Even though there are many similarities between credit cards and insurance, this practice has never been applied to insurance policies. Currently, if an insured discovers a cheaper or better insurance policy, he or she typically waits until the end of the current policy before purchasing and initiating a new policy. In order to cancel a current policy, an insured must go through a complex process on his or her own initiative. This inconvenience reduces choice, flexibility and inclination to switch.
An individual's insurance needs often vary based upon temporary changes in his or her risk profile. Historically, an individual has either had to pay for coverage he or she did not need, or cancel and subsequently reinstate insurance coverage.
When providing third-party liability coverage, specifically bodily injury and property damage liability coverage, an insurance provider does not offer a user the ability to self-insure a portion of the loss in exchange for a lower rate. The primary reason for this is that these coverages are designed to provide innocent third parties a source of economic recovery in the event of an accident. Thus, insurance providers are ultimately responsible, on a first dollar basis, for any claim where the insured refuses to pay or is unable to pay the deductible.
Currently, most individuals maintain relatively incomplete records regarding their household possessions. This is due in part to the difficulty in keeping such a list current. Keeping such a list on a computer makes it easier to add to the list. If the computer is maintained away from an individual's home, the likelihood that the individual will be able to locate the list when needed is enhanced. For example, in the event of a house fire, a list of household contents that is kept in the house is likely to be lost. Furthermore, when making a claim, it is quicker and easier to select items from an existing, computer-based list than it is to, create a new document containing a list describing household possessions, especially given that these possessions may no longer exist.
Internet users can be classified into three broad groups based upon their activity at a merchant site. Browsers are the visitors who look at the content presented on the site, but do not transact any business with the merchant. These visitors are indirectly counted through measures such as a raw page hits. The second major group is prospects. Prospects are distinguished from browsers by beginning a purchase process. For an insurance carrier, a browser becomes a prospect when the browser begins the quoting interview process. The last major group is customers, policyholders in insurance parlance. Policyholders are those visitors who have completed a purchase of insurance.
Current numbers indicate that attrition between these classes of internet users is tremendous. The conversion rate from internet browser to prospect is comparable to direct mailing conversion rates—percentages well under five percent. In addition, many internet users who begin a purchase abandon the process before completion. Some estimates indicate that about one-third of prospects become customers. In this environment, a merchant or service provider would like to obtain qualified leads and quickly execute the purchase.